Ind-Ra rates ENICL's non-convertible debentures at 'IND AAA(SO)'/Stable.
The transmission line was affected by flash floods in the Ganges and has not been operating since 23 August 2016. A transmission tower in the river bed was washed away and three adjacent transmission towers were also affected.
ENICL's bank statement confirms the cash availability of about INR450m, which is adequate to meet the estimated construction expenses and debt servicing. ENICL also expects to receive an advance payment from insurers. Insurance covers force majeure and revenue loss due to such events as well. Presence of bank guarantee covering six months' debt service provides comfort regarding debt servicing.
In the conference call held on 21 October 2016 with the stakeholders, the company said restoration is expected to be completed by January 2017. The company also informed that contractors have been mobilised to carry out the restoration works. A reasonable time for restoration will be determined by ERPC, generally in discussion with the transmission licensee and delay in restoration beyond such timeline could affect the availability of the project.
The Power Grid Corporation India's 400kV Patna - Kishanganj transmission line, crossing the Ganges in the same region, was also affected due to the floods. Force majeure was recognised for it, as well.
ENICL's revenue receipts remain unaffected till date. Availability certificate at 98.507% for August 2016 is in place. The company expects the deemed availability of 98% to be approved by ERPC from September 2016 to the time the line is charged and becomes operational again. ERPC has already approved the incident as force majeure and it is highly likely that ENICL will receive full revenue based on deemed availability till the line is made operational. Against this backdrop, the management expects the cash flow mismatches to be minimal and debt service coverage ratios not to be affected.
Ind-Ra would continue to monitor the availability of assets, revenue receipts, proceeds from insurance cover and progress in the restoration of transmission line to assess the impact on the rating, if any. Please refer the last rating rationale here.
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ENICL, held by Sterlite Grid1 Limited and Sterlite Power Transmission Limited, has set up a 400kV double circuit transmission line for the import of surplus power from the north eastern and eastern regions to the northern region. The transmission line comprises two sections - from Bongaigaon in Assam to Siliguri in West Bengal (commissioned on 13 November 2014) and from Purnia in West Bengal to Bihar Sharif in Bihar (commissioned on 13 September 2013).
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